C-160/01

MAU

OPINION OF ADVOCATE GENERAL MISCHO delivered on 2 July 2002 1

1. The Sozialgericht (Social Court) Leipzig 3. Articles 3 and 4 of the Directive read as (Germany) has asked the Court to interpret follows: Articles 3 and 4 of Council Directive 80/987/EC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer, 2and also to interpret 'Article 3 Article 141 EC in order to determine a dispute concerning a female employee on child-raising leave.

1. Member States shall take the measures necessary to ensure that guarantee institu- tions guarantee, subject to Article 4, pay- ment of employees' outstanding claims resulting from contracts of employment or I — Legal context employment relationships and relating to pay for the period prior to a given date.

A — The Community legislation 2. At the choice of the Member States, the date referred to in paragraph 1 shall be:

2. The purpose of Directive 80/987 is to provide employees with a minimum degree of Community protection in the event of their employer's insolvency, without preju- — either that of the onset of the dice to more favourable provisions under employer's insolvency; the legal systems of the Member States. For this purpose the Directive provides for specific guarantees for the payment of remuneration which has not been received. — or that of the notice of dismissal issued 1 — Original language: French. to the employee concerned on account 2 — O J 1980 L 281. p. 2V of the employer's insolvency;

— in the case referred to in Article 3(2), When Member States exercise this option, second indent, ensure the payment of they shall inform the Commission of the outstanding claims relating to pay for methods used to set the ceiling.'

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B — The national legislation insolvency proceedings is lodged and such proceedings are manifestly not anticipated by reason of insufficiency of assets, 4. In G e r m a n y , the provisions of Paragraph 183 of the Sozialgesetzbuch III (German Social Code, Part III, 'SGB III') 3 aim to implement Directive 80/987 in national law. Subparagraphs (1) and (2) of Paragraph 183, entitled 'Employees' (onset of insolvency) they are still entitled right', as amended by the First Act amend- to pay for the three months of the employ- ing SGB III, 4provide as follows: ment relationship preceding that date. Entitlement to pay includes any entitlement to remuneration based on the employment relationship.

' 1 . Employees shall be entitled to insol- vency benefit if

2. Where an employee who is unaware of the onset of insolvency continues or begins to work, he shall be entitled to pay on the basis of the employment relationship for (1) at the time of the opening of insolvency the three months preceding the date when proceedings in respect of their he learnt of the insolvency.' employer's assets,

10. By letter of 16 December 1999, received by the Amtsgericht Leipzig (Local Court, Leipzig) (Germany) — Insolvency Court — on 27 December 1999, the Deut- sche Angestelltenkrankenkasse (German 7. Between 16 September and 29 December Salaried Employees' Sickness Fund), as the 1999 she was prevented from working by institution collecting all social insurance Paragraphs 3(2) and 6(1), first sentence, of contributions, petitioned for the opening of the Mutterschutzgesetz (Law on Maternity insolvency proceedings in respect of the Protection). During that period she received assets of the plaintiff's employer on account from her Sickness Fund maternity benefit of arrears of contributions. The petition totalling DEM 1 575 (DEM 25 per calen- was refused for lack of assets by order of dar day). She gave birth on 3 November the Amtsgericht of 23 June 2000. 1999.

(4) Does the Court hold to its view that the date to be taken as the basis for 13. The Sozialgericht, which was uncertain determining the reference period is that as to whether the national law was con- of the request for the opening of sistent with the relevant Community law, insolvency proceedings? in particular Directive 80/987, decided to stay the proceedings and to obtain a pre- liminary ruling from the Court on the following questions:

'(1)Does Paragraph 183(1) of SGB III (5) Is the calculation of the insolvency provide for a date within the meaning benefit p e r i o d p r o v i d e d for in of Article 3 of Council Directive Paragraph 183(1) of SGB III compat- 80/987/EC of 20 October 1980 on the ible with Article 141 EC? approximation of the laws of the Member States relating to the protec- tion of employees in the event of the insolvency of their employer?

(2) Has the Federal Republic of Germany (6) In the case of claimants who are on effectively limited the liability of the child-raising leave, is the day before Bundesanstalt für Arbeit in accordance that leave was taken the relevant date w i t h A r t i c l e 4 of D i r e c t i v e for the purposes of Article 3(2) of 80/987/EEC? Directive 80/987/EEC?'

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IV — Assessment ings], namely 27 December 1999, were taken as a basis, the reference period under German law would run from 27 September to 26 December 1999. During that period the plaintiff had a claim against her employer for outstanding pay less the DEM 25 per calendar day in maternity The first and fourth questions benefit paid by the Sickness Insurance Fund pursuant to Paragraph 11(1)(1) of the Mutterschutzgesetz (Law on Maternity Protection'.

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19. First of all, it submits that the Federal Others and Berto and Others and Maso Republic of Germany correctly applied 'the and Others, the Court held precisely that legal definition given by the Community the phrase 'onset of the employer's insol- legislature in Article 2 of the Directive on vency' in Articles 3(2) and 4(2) of Directive insolvency, which provides that an 80/987 must not be interpreted by reference employer is deemed insolvent within the to the concept of 'insolvency' as used in meaning of the Directive Article 2 of the Directive.

"(a)where a request has been made for the 21. According to the Court, 'in order for opening of proceedings involving the the Directive to apply, two events must employer's assets... have occurred: first, a request for proceed- ings to be opened to satisfy the claims of creditors collectively must have been lodged with the competent national auth- ority and, secondly, there must have been and either a decision to open those proceedings, or a finding that the business has been closed down where the available assets are insufficient.

(b) where the authority which is compet- ent... has

Although the occurrence of those two events... is a condition precedent for the guarantee provided for in the Directive to — either decided to open the proceed- come into play, nevertheless it cannot serve ings, to identify the outstanding claims which are subject to the guarantee. That question is governed by Articles 3 and 4 of the Directive, which necessarily refer to a single date prior to which the reference periods — or established... that the available specified in those articles must run'. 9 assets are insufficient to warrant the opening of the proceedings'". 8

23. However, as the Commission correctly 27. It is true that the Court referred to the observed at the hearing, such a conclusion circumstances of the case in paragraph 40 is unacceptable in view of the need for the of the judgment in Bonifaci and Others and uniform interpretation and application of Berto and Others and in paragraph 50 of Community law, which it is the function of the Maso and Others judgment. However, a reference for a preliminary ruling to it is clear from the same paragraphs that, in preserve. 10 Community provisions cannot finding that the phrase 'onset of the be interpreted on an 'à la carte' basis, employer's insolvency' in Articles 3(2) and depending on the characteristics of each 4(2) of Directive 80/987 must be inter- national legal system. preted as designating the date of the request for the opening of proceedings to satisfy the claims of creditors collectively, the Court based its reasoning on the time-limits referred to in Article 4(2).

filment of the conditions set out in Member States and they are by no means Article 2(1) of the Directive, payment of peculiar to Italy. that remuneration might, given the tem- poral limits referred to in Article 4(2), never be guaranteed by the Directive, for reasons wholly unconnected with the con- duct of the employees. That last con- sequence would be contrary to the purpose of the Directive which is, as the first recital in its preamble makes clear, to provide a minimum level of Community protection 31.1 therefore consider that the German for employees in the event of the insolvency Government cannot seek a different inter- of the employer'. 11 pretation of 'onset of the employer's insol- vency' within the meaning of Article 3(2), first indent, of Directive 80/987 solely on the ground that the German legislature chose not to apply in full the time-limits referred to in Article 4(2), first indent, of the same Directive.

29. It is true that, in the present case, the German legislature has not used all the possibilities with regard to time-limits offered by Article 4(2) of Directive 80/987. It has laid down a reference period of three months which must not be within the six 32. Finally, the German Government con- months preceding the date of the onset of siders that the interpretation of the date of the employer's insolvency, which the 'onset of insolvency' as the date of the Article 4(2), first indent, would have per- request to open the proceedings would mitted it to do. As that provision offers entail adverse consequences for employers only a minimum guarantee, the Federal and employees and, more generally, for the Republic of Germany was free to improve economic situation as a whole. the guarantee given to employees.

'The phrase "onset of the employer's insol- vency" used in Articles 3(2) and 4(2) of 36. Secondly, the plaintiff's legal represen- Directive 80/987 must be interpreted as tative replied, perfectly correctly, that designating the date of lodging of the employees do not normally leave their job petition for the opening of proceedings to unless they have found another. If that is satisfy collectively the claims of creditors. not the case, there is no reason for leaving Consequently Articles 3(2) and 4(2) of of their own volition, which could fur- Directive 80/987 preclude a provision of thermore cause problems, particularly with national law such as Paragraph 183(1) of regard to obtaining unemployment benefit. SGB III if the latter fixes the date of the Amtsgericht decision relating to the peti- tion for insolvency proceedings as the 12 — Without employees, the administrators would find it decisive date for the calculation of the impossible to continue to run all or part of the business or to restore it as a whole to profitability. reference periods.'

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The second question 44. I would only add, with reference to the reply to the first and fourth questions, that the Federal Republic of Germany was, in my opinion, authorised to give employees a better guarantee than the minimum guar- 40. With the second question the national antee provided by Article 4(2) of the court asks whether the Federal Republic of Directive by prescribing a reference period Germany has effectively limited the liability of three months which is not to be included of the Bundesanstalt für Arbeit in accord- in the six months preceding the onset of the ance with Article 4 of Directive 80/987. employer's insolvency. On this point, the Federal Republic of Germany has therefore, in my opinion, correctly implemented Article 4(2) of Directive 80/987.

47. The German Government in essence that 'it should be borne in mind that when merely observes that the question is irrel- it interprets and applies national law, every evant because the Federal Republic of national court must presume that the State Germany has correctly implemented Direc- had the intention of fulfilling entirely the tive 80/987. obligations arising from the directive con- cerned. As the Court held in its judgment in Case C-106/89 Marleasing [1990] ECR I-4135, paragraph 8, in applying national law, whether the provisions in question were adopted before or after the directive, the national court called upon to 48. However, I think the question deserves interpret it is required to do so, so far as more detailed consideration. possible, in the light of the wording and the purpose of the directive in order to achieve the result pursued by the latter and thereby comply with the third paragraph of Article 189 of the Treaty'.

However, it may be argued that the Direc- tive is not directly applicable because, in If it were found that the Directive is directly the present case, it would remove entirely applicable, the national court would have the discretion left to Germany. to refrain from applying the national provisions of Paragraph 183(1) of SGB III which conflict with the Directive and base its decision on the rules flowing directly from the Directive.

The German legislature clearly chose the first variant of Article 3(2) of the Directive but, as we have seen, on conditions and according to rules which are not compat- ible with Community law. It is therefore necessary to amend the legislation (assum- ing that interpretation in conformity with With regard to the present case, if it is the Directive is not possible). In those found that the Directive is directly appli- circumstances, the German legislature cable, that could mean that the guarantee may perfectly well choose one of the other obligation would be determined, not by a variants — for the future — and is not reference period from 23 March to 22 June bound by its previous choice on the basis of 2000, but by the three months preceding options which have been found impossible'. the date of opening of the insolvency proceedings (27 December 1999), that is to say, the period from 27 September to 26 December 1999. As the plaintiff in the main proceedings was on maternity leave during that period, the guarantee benefit would have to represent the difference 54. For that reason I consider, like the between the daily maternity allowance Commission, that the idea of the direct and the salary stipulated by the contract applicability of Directive 80/987 must be of employment. It is clear from the order dismissed.

— It is true that the German legislature enacted SGB III on 24 March 1997 and it came into force on 1 January 1998, 18 that is to say, before those judgments. In the period up to the date in question, '— In the Francovich I judgment, the however, the German legislature Court found that the object of Direc- amended SGB III 17 times (and up to tive 80/987/EEC was to give employees the present, 27 times). Consequently the right to a guarantee of payment of the legislature had sufficient opportun- their unpaid wage claims and the con- ity to bring the German provisions into tent of that right could be identified on conformity with the Court's interpre- the basis of the provisions of the tation of Articles 3(2) and 4(2) of the Directive. 17 Directive. In addition, the problem of the conformity of Paragraph 183(1) of SGB III was the subject of discussion in 16 — See the judgments in Francovich, cited above; Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur aud Factor- tame [1996] ECR I-1029; Case C-392/93 British Tele- communications [1996] ECR I-1631; Bonifaci and Others and Berto and Others, cited above; Joined Cases C-178/94, 18 — By way of exception, the provisions concerning insolvency C-179/94 and C-188/94 to C-190/94 Dülenkofer and benefit took effect only on 1 January 1999 pursuant to Others [1996] ECR I-4845; and Case C-118/00 Larsy Paragraph 430(5) of SGB III because Paragraph 141b of [2000] ECR I-5063. the Law on the Promotion of Employment continued to 17 — Cited above, paragraph 44. apply to insolvencies occurring before 1 January 1999.

'Taking account of the reply given to the The fifth and sixth questions first and fourth questions, it is for the national court to consider whether it is possible to give the national provisions an interpretation which conforms with the Directive.

19 — See Peters-Lange, in Gacel, Kommentar zum SGB III, March 2001. Paragraph 183, nines 2 to 4 and 84, with 59. I think these two questions should be further references. dealt with together.

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62. In addition, it was established at the hearing that the plaintiff's problem orig- inates from the fact that, in the words of 65. It is true, as the Commission rightly her legal representative, specific measures observes, that in the present case the of family policy ('familienspezifische Rege- question is hypothetical.

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66. The question whether a period of protection of employees in the event of the child-raising leave must be 'neutralised' insolvency of their employer, in particular when determining the reference period in order to guarantee payment of their arises only where the former coincides with outstanding claims'. 20 the latter. In the present case, that would apply only if the reference period were calculated retrospectively from the date of the decision refusing the petition for insol- vency, which was given on 23 June 2000.

73. Consequently a Member State cannot take the opposite course of specifying a period to be chosen and then considering whether, during that period, pay was due or not, while leaving out of account earlier 75. In view of the abovementioned purpose periods during which remuneration was of Directive 80/987 and, in particular, unquestionably due but was not paid. If Article 4, which, while allowing Member that method were accepted, the entire States to limit the institutions' liability, practical effect of Directive 80/987 could provides at the same time for certain be called into question. minimum guarantees, I do not think the term 'employment relationship' in Article 4 can be interpreted in such a way as to permit the minimum guarantees provided for by Article 4(2) of Directive 80/987 to be nullified. 74. However, the purpose of the Directive was clarified by the Court in the Regeling judgment 21 which related in particular to Article 4 of Directive 80/987. At paragraph 20 of the judgment the Court made the following observations: 76. However, that is precisely the effect of a national measure which causes 'the last three months of the contract of employ- ment or employment relationship' within the meaning of Article 4(2), first indent, to coincide with a period during which the 'The guarantee institutions are required, in employment relationship was suspended principle, in accordance with Article 3(1) of and no pay was outstanding. the Directive, to guarantee payment of employees' outstanding claims relating to pay for the period prior to a given date. It is purely by way of derogation that Member States have the option, under Article 4(1), to limit that liability to pay to a given period fixed in accordance with the 77. Therefore the term 'employment rela- detailed rules laid down in Article 4(2). tionship' in Article 4(2) of Directive 80/987

79. The term 'employment relationship' is not one of those listed in Article 2(2). It is clear from the Regeling judgment, cited above, that since the words 'employment relationship', like the phrase 'outstanding claims relating to pay for the last three months' referred to in that judgment, 'apply to the actual determination of the 82. I therefore propose that the reply to be minimum guarantee under Community given to the sixth question is that the term law, they must be given a uniform inter- 'employment relationship' in Article 4(2) of pretation if the harmonisation sought, even Directive 80/987 must be interpreted as in part, at Community level is not to be excluding a period during which the rendered ineffective'. 23 employee was not entitled to pay because the employment relationship was sus- pended ('ruhendes Arbeitsverhältnis') by 21 — See the Regeling judgment, cited above, paragtaph 19. reason of child-raising leave.

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V — Conclusion

83. Having regard to the foregoing observations, I propose the following replies to the questions submitted by the national court:

First and fourth questions

Taking account of the reply given to the first and fourth questions, it is for the national court to consider whether it is possible to give the national provisions an interpretation which conforms with the Directive.

If that is not possible, liability on the part of the Member State, arising from incorrect implementation of a provision of the Directive conferring rights upon individuals, can only be envisaged in accordance with the principles developed by the Court, because the discretion granted to the national legislature by Articles 3(2) and 4(2) of Directive 80/987 renders the direct application of those provisions impossible even though the legislature originally chose an approach which entails a breach of Community law.

The refusal for several years to bring a provision of national law implementing Articles 3(2) and 4(2) of Directive 80/987 into conformity with an unambiguous interpretation of those provisions by the Court is a sufficiently serious breach of Community law.'

Fifth and sixth questions

'The term "employment relationship" in Article 4(2) of Directive 80/987 must be interpreted as excluding a period during which that relationship was suspended ("ruhendes Arbeitsverhältnis") by reason of child-raising leave.'

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